The ONS figures showed that the number of people employed full time rose by 113,000, offsetting a fall in part-time employment of 23,000.

There was a drop in the number of long-term unemployed. Those out of work for more than two years fell by 10,000 to 434,000, while the number out of work for more than a year dropped by 5,000 to 892,000.

However, there was a slight increase in youth unemployment for the first time since last summer. The number of 16 to 24-year-olds out of work rose by 1,000 to 957,000.

Mark Beatson, chief economist at the Chartered Institute of Personnel and Development, said this was "a continuing cause of concern".

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Labour's Liam Byrne says behind the headline figures there are some "shaky foundations"

"The number of unemployed 18-24 year olds has increased whereas unemployment in age groups 25-64 has fallen. If this trend continues we risk a permanent scar on the labour market," he said. "It is in employers' interests to build their future skills base by recruiting the next generation of workers."

Employment Minister Mark Hoban said: "These are very positive figures showing employment rising for 15 months and despite difficult economic circumstances, unemployment is lower than when this government took office."

Shadow work and pensions secretary Liam Byrne welcomed the fall in unemployment, but added the figures showed "shaky foundations".

"Half of the country saw yet another rise in unemployment, nearly half a million people have been on the dole for more than a year, and youth unemployment rose," he said.

Economy 'puzzle'

The number of people out of work in the UK has been falling steadily for almost a year, despite concerns over the economy's sluggish growth.

There are worries that figures to be released on Friday will show that the economy contracted during the final quarter of the year.

"Output looks to be flatlining while employment is still rising, continuing the pattern of the past year," said Rob Wood at Berenberg Bank.

"We suspect that this puzzle must come to a head soon. It seems unlikely to us that employment can continue rising while the economy is flatlining."

ONS said the number of vacancies, at 494,000, was the highest since the end of 2008. Earlier on Wednesday, restaurant chain McDonald's said it would create 2,500 jobs in the UK this year, although this was less than the 3,500 it created last year.

John Philpott, director of the consultancy The Jobs Economist, welcomed the announcement, adding, "there is talk amongst many employers of additional hiring".

However, he noted there had also been several announcements of redundancies. "I think the picture for the coming months will see continued growth in jobs, but not at the kind of pace we saw in 2012.

"The likelihood is that by the summer of this year, unemployment will be rising, (but) not dramatically," he added.

The collapse of a number of retail chains employing thousands of people over the past month, including Comet and Jessops, are expected to add to jobless numbers in the coming months.

Lloyds Banking Group also announced details of 940 job cuts on Wednesday. They are part of a major restructuring announced in 2011, which will see 15,000 posts go in total.

Regional airline Flybe also said it was planning to cut about 300 jobs.

Wage pressure

The ONS figures showed that pay was still increasing at a lower rate than consumer prices inflation, which has held steady at 2.7% for the past three months.

Average earnings (including bonuses) rose by 1.5% in the year to November, the ONS said, down from a previous figure of 1.8%. Earnings excluding bonuses rose by 1.4%, down from 1.7%.

A study released by the conciliation service Acas on Wednesday said that a third of employees had seen their wages cut or frozen last year, and nearly 30% had seen their workload increase.

However, Acas noted that this may have helped to avoid more job losses, saying that only 14% of workplaces had seen compulsory redundancies.

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